National Association of Home Builders forecast is close, but no cigar
Back in January, the National Association of Home Builders forecast 1,162,000 total starts for 2015 and 804,000 single-family starts — annual increases of 16% and 24%.
Close, but no cigar.
With 11 months in the books, and assuming December’s numbers will resemble November’s numbers, the industry is looking at a likely unadjusted total of roughly 1,122,300 housing starts, and a single-famIly mark of 718,200. Those numbers represent annual gains of about 11% over 2014.
Can the industry provide another year of significant residential construction gains in 2016, even as interest rates appear to be bouncing up from historic lows? Many think so, and here’s why: the time-tested principle of reversion to the mean. If more than 50 years of data show an annual housing starts average of 1.5 million, then it’s a good bet that the industry is going to cross that line eventually. And we’re not even close.
Look for more forecasts online at HBSDealer.com.
Ringing in the New Year with new holdings
US LBM Holdings finished the year with a bang. Less than a week after announcing a major Texas-based expansion, the company signed up a handful of lumberyard and building products companies in Minnesota and the Dakotas.
With the acquisition of NexGen, US LBM gains a variety of entities, including Minnesota Building Pros, Webster Home Center, Britton Home Center, Truss Pro’s, and Precision Wall Systems.
“We are thrilled to add these great businesses to the US LBM family,” said L.T. Gibson, president and CEO of US LBM. “By extending our products and services into the Upper Midwest, we can strategically serve the industry in that growing market. We are eager to partner with their associates and look forward to future opportunities together in the region.”
The move brings the footprint of the fast-growing holding company to 204 locations in 26 states.
Also in December, US LBM announced the acquisition of Texas-based Parker’s Building Supply.
The move will bolster US LBM’s presence in Texas and California and enhance its ability to serve an expanding customer base in that area.
Former owner Scott Parker will continue in an advisory role, and Chris Miller will become president. Parker’s will continue its relationship with its co-op and distributor, Do it Best Corp. Additionally, the move brings to US LBM the status as one of the largest Do it Best dealers in the country.
“We’re thrilled to join the US LBM team,” said Parker. “Partnering with the right company will continue to position our brand for growth and presents a great opportunity for our associates.”
Orange-colored sky’s the limit
Start with today’s competitive home improvement landscape. Now, add a brand new, built-from-scratch, $13 billion home center behemoth by the year 2018.
Does that grab your attention?
Well don’t look now, but that’s kind of what’s going to happen if Atlanta-based Home Depot’s “conservative” forecasts hit their target. The retailer isn’t really going to launch a new chain or significantly grow its footprint. But it does expect to grow by the sales equivalent of 357 stores, as it marches toward $101 billion in sales in 2018.
That’s like taking a new, third-largest U.S. home improvement retailer, and bolting it on top of the first.
“Can you bucket that for me?”
That was one of the questions asked during the company’s nearly four-hour shareholders meeting last month. The short answer involves getting more out of new and existing customers, getting more out of interconnected retail, and getting more out of its stores.
Professional customers are going to have a say in this growth. They represent 3% of the company’s customers but 40% of its sales. And they’re getting a new tool in 2016.
As CFO Carol Tomé explained, Home Depot has a commercial credit card that gives pros an average line of $6,800. But most don’t come close to that limit. “Why? Because it’s not a financing tool,” she asked and answered. “Our pros need a financing tool.”
And they’re getting one in the form of a new commercial card in 2016 that offers 60-day terms. “They get paid before they have to pay us,” Tomé said.
Growth area No. 2: keeping up with the increasingly digital customer. The company says it has successfully piloted Buy Online Deliver From Store, providing specific delivery windows as soon as next day.
Mark Holifield, EVP supply chain, explained delivery is nothing new to the Home Depot. But, “before it was 40 clicks to get to a final delivery for an associate, it’s now maybe nine clicks, and takes a lot of complexity out of the process.”
And for new and existing customers, give them some sizzle to go along with the steak.
“Innovation is a key factor that continues to drive the excitement and the customers’ willingness to spend in this space, and that’s something that we’re focused on,” said CEO Craig Menear.